Commenting on the expected impact of Hurricane Harvey to NGL and petrochemicals, Wood Mackenzie said: "The loss in demand and storage limitations will affect NGL prices. 2015's Memorial Day flood massively impacted NGL prices and curve structure due to floodwater-led storage constraints. Propane traded at a record low 24% of WTI, and traders would pay an astounding 5 c/gal for one month of LPG storage space. Ethane has the biggest risk for a 10-20% price collapse from Harvey, as inventories persist over fifty million barrels while nearly half of total ethane demand is offline.

"The impact of Harvey is the loss of 7-9% of the global ethylene capacity base. Most steam cracker complexes in the US have also stopped production at downstream derivatives (polyethylene, PVC, etc). This largely contains the impact on pricing and volumes to within the US value chain. Global olefins and derivatives markets were in a relatively tight spot heading into the event, with the market bracing itself for the start-ups of Dow Chemicals LHC-9 steam cracker unit and Enterprise's PDH unit in Q3 2017. Any delays to the start of these units extends the current period of strong margins.

"Most of the US Paraxylene (PX) assets are located within refineries impacted by Hurricane Harvey. None of the North American PX consuming assets are impacted so the worry for regional consumers will firstly be in securing supply and subsequently that US PX prices may spike in September if the outages are prolonged. Around 30% of total US benzene capacity is currently offline, but the upward impact of this on pricing has been mitigated by various derivative outages as well. Combined with the loss of ethylene capacity, US styrene output has also been significantly affected by Harvey. With the US acting as a key global exporter of styrene, the impact on logistics and freight movements is also expected to ripple through the global markets over the coming weeks."

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